SHRI R. BALAKRISHNAN,CHENNAI vs. ITO, PUDUCHERRY

PDF · subscribers
ITA 2205/CHNY/2016Status: DisposedITAT Chennai28 October 2016AY 2008-094 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of peak credit based on the assessee's agreement for peace with the department does not automatically imply concealment of income. It was also noted that an individual can maintain a personal bank account not reflected in business books.

What were the facts?

The assessee, a wholesale vegetable merchant, agreed to an addition of peak credit of Rs. 2,38,350/- in a bank account used for personal purposes. The Assessing Officer levied a penalty under Section 271(1)(c) for concealment of income.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when an addition was accepted by the assessee for reasons other than admitting concealment of business income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]

आदेश / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER In this appeal filed by the assessee, its grievance on levy of penalty of �1,00,355/- u/s.271(1)(c) of the Act.

ITA No.2205/Mds/2016 :- 2 -:

2.

Facts apropos are that assessee a wholesale merchant in vegetables had filed a return disclosing an income of �3,30,410/-.

1.

During the course of assessment, it was noticed that assessee had deposits in a bank account with ING Vyasa Bank, Pondicherry.

Assessing Officer found that some of the transactions in this bank account were not shown in the books of accounts of the assessee.

When this was put to assessee, it seems he agreed for the addition of peak credit in this bank account. The Peak credit came to �2,38,350/- and an addition of said amount was made. Further, Assessing Officer also made an addition for low gross profit rate. Addition on the gross profit came to Rs.60,206/-. Aggregate addition came to ₹2,98,556/-.

Thereafter notice u/s.271(1) (c) r.w.s 274 of the Act was issued to the assessee seeking reason why penalty should not be levied under the former section. Reply of the assessee was that he was a vegetable merchant and had used his account in ING Vyasa for personal purpose also. As per assessee said account being personal account he had not incorporated the entries therein in its books of accounts. However, Assessing Officer did not accept the above contention. According to him, there was concealment of income to the extent of peak credit in the said bank account. He levied a penalty of 100% of the tax sought to be levied which came to �1,00,355/-.

ITA No.2205/Mds/2016 :- 3 -:

3.

Assessee moved in appeal before ld. Commissioner of Income Tax (Appeals) but did not meet with any success.

4.

Now before us, ld. Authorised Representative submitted that assessee has agreed for the addition not because it was part of his business receipts but only since assessee wanted to maintain peace with Department. As per ld. Authorised Representative there was no concealment of income.

Per contra, ld. Departmental Representative strongly 5.

supported the orders of the authorities below.

We have considered the rival contentions and perused the 6. orders of the authorities below. The findings of the Assessing Officer in penalty order is that there was concealment of income to the extent of deposits made by the assessee in its bank account in ING Vyasa. The peak credit came to �2,38,350/-. Assessee had given an explanation that the said account was used for his personal purpose and this was the reason why entries thereon were not recorded in the books of accounts of his business. Admittedly, assessee was running a proprietary concern called Rasu Pillai & Sons selling vegetables. It is not required that every personal account maintained by an assessee in a bank should be reflected in the books of his business. Nothing stops

ITA No.2205/Mds/2016 :- 4 -: the assessee who is an individual to maintain a bank account for personal use which is not connected to his business. There is no finding by the lower authorities that credits in the bank account were unexplained income of the assessee. They had made the addition of peak credit just because assessee accepted it. This would not mean that there was a concealment that would attract the rigours of Sec. 271(1) (c) of the Act. We are of the opinion that this was not a fit case for levy of penalty. Penalty levied stands deleted.

In the result, the appeal of the assessee is allowed. 7.

Order pronounced on Friday, the 28th day of October, 2016, at Chennai.

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →